West Kensington leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease becomes more expensive. It is the case that most West Kensington tenants have the right to extend their lease by an additional ninety years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in West Kensington you should investigate if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
Leasehold residencies in West Kensington with over one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Chelsea Building Society | 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Regardless of whether you are a tenant or a freeholder in West Kensington,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with West Kensington valuers.
Benjamin was the the leasehold proprietor of a studio flat in West Kensington on the market with a lease of a little over sixty years unexpired. Benjamin on an informal basis contacted his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £100 yearly. No ground rent would be due on a lease extension were Benjamin to invoke his statutory right. Benjamin obtained expert legal guidance and secured satisfactory resolution informally and ending up with a market value flat.
Last Spring we were approach by Dr V David , who purchased a garden apartment in West Kensington in April 2011. We are asked if we could approximate the premium could be to extend the lease by a further 90 years. Similar residencies in West Kensington with an extended lease were in the region of £198,800. The average amount of ground rent was £55 billed quarterly. The lease ended in 2081. Taking into account 55 years as a residual term we approximated the premium to the landlord for the lease extension to be within £33,300 and £38,400 not including professional charges.
An example of a Lease Extension matter before the tribunal for a West Kensington residence is 93 Oakwood Court in June 2010. the LVT determined that the premium to be paid for the new lease was £492,083, This case related to 1 flat. The number of years remaining on the existing lease(s) was 37.79 years.